22
| |
22
| |
25
| |
27
| |
31
| |
31
| |
33
| |
38
| |
39
| |
40
| |
40
| |
42
|
| |
Sales
Charge (Load) Imposed on Purchases
|
|
Purchase
Fee
|
|
Sales
Charge (Load) Imposed on Reinvested Dividends
|
|
Redemption
Fee
|
|
Account
Service Fee Per Year
(for
certain fund account balances below $10,000)
|
$ |
| |
Management
Fees
|
|
12b-1
Distribution Fee
|
|
Other
Expenses
|
|
Total
Annual Fund Operating Expenses
|
|
1
Year
|
3
Years
|
5
Years
|
10
Years
|
$6
|
$ |
$ |
$ |
|
Total
Return
|
Quarter
|
|
|
|
|
- |
|
|
1
Year
|
5
Years
|
Since
Inception
(Oct.
16,
2012)
|
Vanguard
Short-Term Inflation-Protected Securities Index
Fund
Admiral Shares
|
|
|
|
Return
Before Taxes
|
4.97% |
2.76% |
1.37% |
Return
After Taxes on Distributions
|
4.46 |
2.09 |
0.92 |
Return
After Taxes on Distributions and Sale of Fund Shares
|
2.94 |
1.82 |
0.85 |
Comparative
Indexes
(reflect
no deduction for fees, expenses, or taxes)
|
|
|
|
Bloomberg
Barclays U.S. TIPS 0-5 Year Index
|
5.07% |
2.82% |
1.39% |
Bloomberg
Barclays U.S. Aggregate Bond Index
|
7.51 |
4.44 |
3.24 |
Plain
Talk About Fund Expenses
|
All
mutual funds have operating expenses. These expenses, which are
deducted
from a fund’s gross income, are expressed as a percentage of the
net
assets of the fund. Assuming that operating expenses remain as stated
in
the Fees and Expenses section, Vanguard Short-Term Inflation-Protected
Securities
Index Fund Admiral Share's expense ratio would be 0.06%, or
$0.60
per $1,000 of average net assets. The average expense ratio for
inflation-protected
bond funds in 2019 was 0.67%, or $6.70 per $1,000 of
average
net assets (derived from data provided by Lipper, a Thomson
Reuters
Company, which reports on the mutual fund industry).
|
Plain
Talk About Costs of Investing
|
Costs
are an important consideration in choosing a mutual fund. That is
because
you, as a shareholder, pay a proportionate share of the costs of
operating
a fund and any transaction costs incurred when the fund buys or
sells
securities. These costs can erode a substantial portion of the gross
income
or the capital appreciation a fund achieves. Even seemingly small
differences
in expenses can, over time, have a dramatic effect on a
fund’s
performance.
|
Plain
Talk About Inflation-Indexed Securities
|
Unlike
a conventional bond, whose issuer makes regular fixed interest
payments
and repays the face value of the bond at maturity, an
inflation-indexed
security (IIS) provides principal and interest payments that
are
adjusted over time to reflect a rise (inflation) or a drop (deflation) in
the
general
price level for goods and services. This adjustment is a key feature,
given
that inflation has typically occurred. However, there have been periods
of
deflation, such as in 1954 when the Consumer Price Index (CPI) declined
by
0.7%. (Source: Bureau of Labor Statistics.) Importantly, in the event of
deflation,
the U.S. Treasury has guaranteed that it will repay at least the face
value
of an IIS issued by the U.S. government. However, if an IIS is
purchased
by a fund at a premium, deflation could cause a fund to
experience
a loss.
|
Inflation
measurement and adjustment for an IIS have two important
features.
There is a two-month lag between the time that inflation occurs in
the
economy and when it is factored into IIS valuations. This is due to the
time
required to measure and calculate the CPI and for the U.S. Treasury to
adjust
the inflation accrual schedules for an IIS. For example, inflation that
occurs
in January is calculated and announced during February and affects
IIS
valuations throughout the month of March. In addition, the inflation index
used
is the nonseasonally adjusted index. It differs from the CPI that is
reported
by most news organizations, which is statistically smoothed to
overcome
highs and lows observed at different points each year. The use of
the
nonseasonally adjusted index can cause a fund’s income level to
fluctuate.
|
Plain
Talk About Real Returns
|
Inflation-indexed
securities are designed to provide a “real rate of return”—a
return
after adjusting for the impact of inflation. Inflation—a rise in the
general
price level—erodes the purchasing power of an investor’s portfolio.
For
example, if an investment provides a “nominal” total return of 5% in a
given
year and inflation is 2% during that period, the inflation-adjusted, or
real,
return is 3%. Investors should be conscious of both the nominal and the
real
returns on their investments. Investors in inflation-indexed bond funds
who
do not reinvest the portion of the income distribution that comes from
inflation
adjustments will not maintain the purchasing power of the
investment
over the long term. This is because interest earned depends on
the
amount of principal invested, and that principal will not grow with
inflation
if the investor does not reinvest the principal adjustment paid out as
part
of a fund’s income distributions.
|
Plain
Talk About Inflation-Indexed Securities and Interest Rates
|
Interest
rates on conventional bonds have two primary components: a “real”
yield
and an increment that reflects investor expectations of future inflation.
By
contrast, interest rates on an IIS are adjusted for inflation and,
therefore,
are
not affected meaningfully by inflation expectations. This leaves only real
interest
rates to influence the price of an IIS. A rise in real interest rates will
cause
the price of an IIS to fall, while a decline in real interest rates will
boost
the price of an IIS.
|
Plain
Talk About Inflation-Indexed Securities and Taxes
|
Any
increase in principal for an IIS resulting from inflation adjustments is
considered
by the IRS to be taxable income in the year it occurs. For direct
holders
of an IIS, this means that taxes must be paid on principal
adjustments,
even though these amounts are not received until the bond
matures.
By contrast, a mutual fund holding an IIS pays out (to shareholders)
both
interest income and the income attributable to principal adjustments
each
quarter in the form of cash or reinvested shares, and the shareholders
must
pay taxes on the distributions.
|
Plain
Talk About Vanguard’s Unique Corporate Structure
|
The
Vanguard Group is owned jointly by the funds it oversees and thus
indirectly
by the shareholders in those funds. Most other mutual funds are
operated
by management companies that are owned by third parties—either
public
or private stockholders—and not by the funds they serve.
|
Plain
Talk About Distributions
|
As
a shareholder, you are entitled to your portion of a fund’s income from
interest
as well as capital gains from the fund’s sale of investments. Income
consists
of interest the fund earns from its money market and bond
investments.
Capital gains are realized whenever the fund sells securities for
higher
prices than it paid for them. These capital gains are either short-term
or
long-term, depending on whether the fund held the securities for one year
or
less or for more than one year.
|
Plain
Talk About Return of Capital
|
Return
of capital is the portion of a distribution representing the return of
your
original investment in a fund. Return of capital reduces your cost basis
in
the fund’s shares and is not taxable to you until your cost basis has been
reduced
to zero. During periods of deflation, the fund’s inflation-indexed
bonds
may experience a downward adjustment in their value. These
downward
adjustments can partially or entirely offset, or more than offset,
the
income earned on the bonds. Under certain circumstances, these
downward
adjustments could require the fund to reclassify a portion of the
income
dividends previously distributed to shareholders as return of capital.
To
reduce the possibility of a reclassification, the fund may determine to
pay
income
dividends less frequently than quarterly in a year and in some years,
the
fund may not pay any income dividends.
|
Plain
Talk About Buying a Dividend
|
Unless
you are a tax-exempt investor or investing through a tax-advantaged
account
(such as an IRA or an employer-sponsored retirement or savings
plan),
you should consider avoiding a purchase of fund shares shortly before
the
fund makes a distribution, because doing so can cost you money in
taxes.
This is known as “buying a dividend.” For example: On December 15,
you
invest $5,000, buying 250 shares for $20 each. If the fund pays a
distribution
of $1 per share on December 16, its share price will drop to $19
(not
counting market change). You still have only $5,000 (250 shares x $19 =
$4,750
in share value, plus 250 shares x $1 = $250 in distributions), but you
owe
tax
on the $250 distribution you received—even if you reinvest it in
more
shares. To avoid buying a dividend, check a fund’s distribution schedule
before
you invest.
|
|
Year Ended
September 30, | ||||
For
a Share Outstanding Throughout Each Period |
2020
|
2019
|
2018
|
2017
|
2016
|
Net
Asset Value, Beginning of Period
|
$24.60
|
$24.25
|
$24.79
|
$24.88
|
$24.27
|
Investment
Operations
|
|
|
|
|
|
Net
Investment Income1
|
0.294
|
0.500
|
0.692
|
0.338
|
0.149
|
Net
Realized and Unrealized Gain (Loss) on Investments |
0.860
|
0.332
|
(0.450)
|
(0.241)
|
0.461
|
Total
from Investment Operations |
1.154
|
0.832
|
0.242
|
0.097
|
0.610
|
Distributions
|
|
|
|
|
|
Dividends
from Net Investment Income |
(0.314)
|
(0.482)
|
(0.782)
|
(0.187)
|
—
|
Distributions
from Realized Capital Gains |
—
|
—
|
—
|
—
|
—
|
Total
Distributions |
(0.314)
|
(0.482)
|
(0.782)
|
(0.187)
|
—
|
Net
Asset Value, End of Period
|
$25.44
|
$24.60
|
$24.25
|
$24.79
|
$24.88
|
Total
Return2
|
4.72%
|
3.46%
|
1.00%
|
0.40%
|
2.51%
|
Ratios/Supplemental
Data
|
|
|
|
|
|
Net
Assets, End of Period (Millions) |
$8,541
|
$7,333
|
$6,525
|
$5,078
|
$3,373
|
Ratio
of Total Expenses to Average Net Assets |
0.06%
|
0.06%
|
0.06%
|
0.06%
|
0.07%
|
Ratio
of Net Investment Income to Average Net Assets |
1.18%
|
2.06%
|
2.81%
|
1.35%
|
0.51%
|
Portfolio
Turnover Rate3
|
37%
|
26%
|
25%
|
27%
|
28%
|
Web
|
|
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|
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|
|
Inception
Date
|
Newspaper
Abbreviation
|
Vanguard
Fund Number
|
CUSIP
Number
|
Short-Term
Inflation-Protected
Securities
Index Fund
|
|
|
|
|
Admiral
Shares |
10/16/2012
|
STIPSIxAdm
|
567
|
922020706
|